US Companies Quietly Caught Trading with the Enemy Commentary: U.S. Companies Risk Only a Wrist Slap

By Rex Nutting
Tuesday 15 April 2003

When individual Americans are accused of helping terrorists, they're thrown in jail and their names are dragged through the mud. But when major U.S. corporations are caught trading with the enemy, they get just a slap on the wrist from the government.

WASHINGTON -- In the past two weeks, the government has revealed that 57 companies and organizations have been fined for doing business with terrorists, despots and tyrants.

However, neither the government nor the companies are forthcoming with the public about the details of the illicit trade with rogue governments like Iraq, Cuba, North Korea, Iran and Sudan. Read about the laws.

The fact that the New York Yankees and ESPN have been caught doing business with Fidel Castro won't be on any highlight film. ChevronTexaco hasn't bragged about breaking the sanctions against Saddam Hussein's Iraq. Citigroup hasn't issued a press release extolling how it helped finance terrorist groups.

With a few exceptions, it is against the law for U.S. companies and individuals to have commercial or financial dealings with several countries as well as dozens of terrorist or drug organizations. Read the list.

Each year, the government investigates thousands of cases of U.S. individuals or companies for alleged violations of the Trading with the Enemy Act and other statutes and executive orders that restrict free trade. Each year, the government imposes millions of dollars in civil penalties and prosecutes 10 or so criminal cases.

We know why the companies are silent about what they've done. No one wants to be associated in the public mind with torturers, thugs and murderers, even if it's profitable to be associated with them in private. The companies' explanations, when available, show that even the most enthusiastic supporter of sanctions can run afoul of the law through no malice on their part.

But why are the government's cops so reluctant to tell us about the crooks they've captured? Who ever heard of a shy prosecutor, especially one who can show success in the war against terrorism?

Double standard

When deranged American citizens are accused of working with terrorist groups like al-Qaida, Attorney General John Ashcroft holds a press conference and the FBI puts a new name and face on its Top 10 Most Wanted List, even though the allegations have not been proved in court.

The suspects can languish in jail for months without any formal charges.

And when a Muslim charity is suspected of laundering funds for alleged terror groups, the Treasury Department shuts it down and freezes its assets.

But when multinational corporations like Wal-Mart, Dow Chemical, ExxonMobil and agree with government prosecutors that they have violated laws that prohibit doing business with enemy states, the news is buried on an obscure government Web site.

57 companies fined

In the past two weeks, the Treasury's Office of Foreign Asset Control has revealed that 57 companies and organizations have been fined more than $1.35 million for civil violations of the sanctions laws.

For the first time, the government will provide weekly updates on the status of its civil cases. But the information provided by the government about these violations is paltry, and unless you've memorized the law, you'll never understand that "EO13121 FT" means an illegal funds transfer to the former Yugoslavia.

The government has provided almost no information about the civil cases except what country the company traded with and what the penalty was. No dates, no details, no way of knowing if the violations were egregious or inadvertent. No way of knowing if the companies sold brass knuckles to the secret police or baby formula to an orphanage.

"The Treasury is giving in to corporate pressure," said Russell Mokhiber, editor of the Corporate Crime Reporter, who sued the government under the Freedom of Information Act to learn the details of earlier violations of the trade sanctions laws.

"To deter future corporate wrongdoing, [the Treasury] must stop protecting major American companies from the glare of adverse publicity," Mokhiber said Monday at a press conference.

"This is the maximum information that we can make available consistent with legal concerns," said a Treasury Department spokesman who would not even provide his name for publication.

Largest case

The largest penalty levied among the 59 public cases was $250,000 against Zim American Israeli Shipping Co. of Norfolk, Va., for trade with Cuba. Zim, which is about half owned by the Israeli government, is one of the largest shipping companies in the world.

Nobody at the Norfolk office of Zim knew anything concrete about the penalty. "I think it happened a long time ago," said one official.

But they do know about terrorism. The company relocated from the 16th floor of the World Trade Center just a week before the Sept. 11 attack, sparking speculation in the conspiracy press that the Israeli Mossad had tipped off the company ahead of time.

As for the Cubans, "I think they are very poor," the Zim official said.

The next largest penalty was imposed on IGI Inc. of Buena, N.J., which makes cosmetics and which recently sold its pet food and veterinary products units. The government said they exported something prohibited to Iran. The company said it would look into the matter and get back to us.

Norwegian-owned shipping company Stolt-Nielsen Transportation Group of Greenwich, Conn., was fined $95,000 for an illegal fund transfer to Sudan.

Yankees and Cubans

The New York Yankees were fined $75,000 for signing a contract in which the Cuban government had an interest. Newsday reported Tuesday that the contracts involved pitcher Orlando "El Duque" Hernandez and three other unnamed Cuban players.

Hernandez has always maintained that he escaped from Cuba to the Bahamas in a wooden fishing boat in late 1997 after being banned from baseball in his homeland following the defection of his brother, Livan, who was the World Series star for the Florida Marlins that fall. It is not clear how his subsequent signing by the Yankees would have involved a payment to the Cuban government.

The Yankees' contract with Jose Contreras is not in violation of the law, Yankee president Randy Levine told the paper.

Wal-Mart was fined $50,000 for dealings with Cuba. A Wal-Mart spokesman said some pajamas sold to its Canadian operations "might have originated in Cuba." The company paid the fine "voluntarily" after lengthy discussions with government lawyers and there was "never any determination of a violation," he said.

Blue chips caught red handed; The other big fines:

* ExxonMobil was fined $50,000 for exports to Sudan.

* ChevronTexaco was fined a total of $14,071.07 for deals with Cuba and Iraq. A company spokesman told the Corporate Crime Reporter that the company bought oil from Iraq under the U.N. Oil for Food program and that a payment was inadvertently paid to an Iraqi government port official.

* Axon Corp. of Raleigh, N.C., was fined $45,000 for exports to Iran. The company makes packaging equipment.

* Fleet Bank was fined $41,000 for financial dealings with Cuba and Iran.

* ESPN was fined $39,000 for a contract with Cuba. A spokesman at the sports cable network said the network's South American unit had paid some travel expenses for the Cuban team at a major international volleyball tournament held in Argentina in 1998 and televised by the ESPN Sur network. The company is owned by Disney and privately held Hearst.

* Royal Crown was fined $38,000 for exports to Sudan. The soft-drink company is now owned by Snapple, which in turn is owned by Cadbury Schweppes.

And a couple of minor but intriguing infractions:

Citigroup was fined $2,925 for violating laws against financing terrorism. A spokesman for the financial services giant did not return a phone call seeking comment. It was the only penalty on the government's list for violation of the anti-terrorism financing law.

The International Union of Pure and Applied Chemistry in Research Triangle Park, N.C., was fined $500 for violating laws against the proliferation of weapons of mass destruction. A spokesman for the group did not return a phone call. It was the only penalty on the government's list for violations of nonproliferation laws.